By the Blouin News Business staff

WTO says trade growth on the right path

by in Global Economy.

Captura de pantalla 2014-04-14 a las 17.37.00

Global trade activities are expected to pick up moderately this year and grow by 4.7%, according to the World Trade Organization. The numbers suggest that a global recovery is in motion, yet international trade will remain below the 20-year average of 5.3% (1983–2013) — for the past two years, growth has been sluggish and averaged only 2.2%. The upward revised forecast more than doubles the 2.1% increase of global trade in 2013.

“We can actively support trade growth by updating the rules and reaching new trade agreements. The deal in Bali last December illustrates this,” said WTO Director-General Roberto Azevêdo who is still polishing the limited success of the global trade negotiation and a work program to complete the Doha round of liberalization talks (which would also mean a significant stimulus in the current slow-growth environment). The dream of a multilateral trade package involving all the WTO’s 159 members is still alive, though the next eight months may see that dream die.

Captura de pantalla 2014-04-14 a las 16.51.59

“For the second consecutive year, world trade has grown at roughly the same rate as world GDP (gross domestic product, a measure of countries’ economic output) at market exchange rates, rather than twice as fast, as is normally the case,” says the report. The generally upbeat tone of the WTO relies on the firming-up of the recovery in the United States and Europe in early 2014; however, it also notes that “growth there will remain uneven as long as peripheral E.U. economies continue to underperform.” Signs of a significant recovery in global commerce in the first quarter of 2014 are still scarce. (The trade forecast for 2014 is premised on an assumption of 3% growth in world GDP growth at market exchange rates).

The multilateral organization mentions some developed-economy risk factors that have receded considerably since last year’s press release and also mentions geopolitical risk, as did the International Monetary Fund last week (Blouin News highlighted the risks to global growth that are still very much alive):

Merchandise trade is projected to grow by 5.3% in 2015, with developed and developing economies posting increases of 4.3% and 6.8%, respectively, on the export side, as well as gains of 3.9% and 7.1% on the import side. For the year we expect to see Asia’s exports grow faster than in 2014 (7.2%), followed by those of South and Central America (5.5%), North America (4.5%), Europe (4.3%), and Other regions (4.2%). In 2015, import growth of Asia should accelerate to 7.0%. Other regions will have the second fastest import growth (6.6%) followed by South and Central America (5.2%), North America (5.1%) and Europe (3.4%).

As the nature of trade negotiations grows ever more complex, the WTO has an opportunity to redesign its influence in member-countries. A more upbeat forecast won’t solve the issues the WTO is facing and that its Director-General (a 2013 Power Player) is trying to overcome.